Here is a guide as to what you should know about Michigan lawyers and how they handle fees, guarantees, and money damages.
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How many lawyer ads have you seen on TV, heard on the radio, or seen on a bus or billboard? Hundreds? Thousands? So many that you’d like to never see another one? How many of those ads have said “We charge the most, but we get the biggest settlements?”
Exactly! None of them. Here’s why.
There is no proven relationship between how big a percentage fee your lawyer takes from your settlement and how much your case is worth. If there were, every lawyer ad you’ve ever seen would tell you that the firm that charges higher percentage fees will get you more money. Whatever your opinion of lawyers might be, the rules of conduct that apply to all of them forbid making advertising statements that are false, misleading, or deceptive. Lawyers can advertise their 800 numbers, slogans, family values, courtroom battles, particular settlements for specific clients….but they can’t say they are “better” than other lawyers who do the same work.
Remember: It’s not just how much your auto case settles for–it’s also important how much of the settlement you get to keep after your lawyer gets paid. The percentage fee that lawyers in Michigan can charge for an automobile or motor vehicle collision case is limited to a maximum of one-third of the net recovery. There is no rule against charging a client a lower percentage fee than that. Don’t be intimidated into thinking that you have to pay the maximum fee just because “that’s standard,” or because “that’s what the rules allow.”
There are many fine attorneys in Michigan who practice motor vehicle injury law. Whatever else their ads may say, you will never hear that one is “better” than another, because there is no proof of that. Be sure that one of the factors you consider when you are interviewing attorneys is whether you want part of your settlement to go toward a full-fee firm’s advertising campaign! It’s your case…what’s that worth to you?
1) Not all automobile injury attorneys charge the maximum 33 1/3 fee from your settlement. 33 1/3% is the maximum allowed under Michigan law.
2) “No Fee Guarantee” is available from any lawyer who handles automobile injury cases for a percentage fee. Any lawyer who wants your case will make you an offer of “no fee unless we recover.” There is nothing special or unusual about such a “guarantee.” At Matz Injury Law, we will make you the same “guarantee” for less than many firms charge.
3) The costs a lawyer spends to prepare your automobile negligence case remains your responsibility whether you get a settlement or not. Be sure that you understand that the attorney costs and attorney fee are different, and what you are going to be charged for, before you hire any attorney to work on your case.
4) The attorney you hire to represent you in your motor vehicle injury case may refer your case to other lawyers, and those firms will each take a part of the fee you are charged. You may have thought you would be represented by the attorney you saw on TV or read about online, only to find out that your case will actually be handled by someone you do not know and whom you may not meet until after you have signed the paperwork. These referral arrangements are one reason many attorneys charge the maximum 33 1/3% fee.
5) When you ask an automobile negligence attorney “How much is my case worth?” beware of anyone who claims that he or she can give you a definite answer. There are so many factors that go into a case that any responsible attorney will tell you in the initial interview that the only cases that can be reliably estimated as to their value are cases that aren’t worth anything! Beware of any attorney who suggests in your initial interview that he or she expects to get you a certain amount. Instead, ask the attorney how much of your settlement will the attorney be charging you as a fee.
6) Pedestrians, bicyclists and motorcyclists may also qualify for money damages, as long as a “motor vehicle” was also involved in the collision. The definition of “motor vehicle” in the no-fault law does not include motorcycles. But as long as a car, truck or other qualifying vehicle was involved in the collision, motorcyclists and people who were not even in a vehicle can still claim money damages for pain and suffering if they are seriously hurt, and were not mainly at fault. They may qualify for no-fault benefits for medical and wage loss coverage, too.
No, you are still responsible for other costs. Costs and fees are two different things. Please read this so that you will have the information before you start interviewing attorneys about your auto injury or other personal injury case in Michigan.
If you are hurt in an accident, or through what you think is the fault of someone else, you may be thinking about filing a legal claim or a lawsuit against them for money damages to pay you back for medical expenses, work time lost, property damage, or for the damage to your body and mind that happen when you get hurt.
You have seen or heard many ads on TV, the Internet and on radio (billboards, too!) about lawyers who handle personal injury cases. Because these ads look and sound basically all the same, some of the lawyers try to sound different by suggesting that they have a special deal for you where you don’t have to pay anything to have a case. While the wording is clever, doesn’t it sound like if you get money, the lawyer doesn’t take any of that, but gets paid separately, so it is “free” to hire the lawyer?
Of course, this is not the way it really works. The only thing that is “guaranteed” is that if you don’t get money, neither does the lawyer! Listen carefully to these ads, and watch the fine print flying by at the bottom of the picture (if you can even see it). When you hire a lawyer—any lawyer—to handle a personal injury case, such as an automobile negligence case, you are responsible to pay all the expenses that the lawyer puts out to look into your case, and to prepare it, win, or lose! And there is more.
If you don’t win your case (and many trials are won by the defense, not by the victim), you may also be responsible to pay many of the costs your opponent spent to fight you!
This is something to take very seriously. When you think about starting a case, you need to know that you are responsible to pay your own lawyer’s expenses win or lose, and you could be on the hook for thousands or tens of thousands of dollars in opponent’s costs and penalties if you don’t win. Your lawyer doesn’t pay the penalties—you do.
Just about all personal injury attorneys will take your case on a contingency fee basis. The word “contingent” means “depends upon.” In a legal case, “contingency fee” means “depends upon winning.” If your lawyer gets you money for your case, you pay a percentage fee to the lawyer. If no money is recovered for your case, you pay no fee to the lawyer. You can use a contingency fee agreement in a personal injury case, but not in a criminal case or divorce matter.
That’s a separate item from the case costs. In order to prepare your personal injury case, a lawyer will spend money on such things as ordering the police report and your medical records. The lawyer will also pay for court filing fees, deposition transcripts, and other items that are necessary to build the case. These are costs that the lawyer pays out in advance, rather than asking you for them each time an item must be ordered. The costs are things the lawyers spend money on to evaluate and prepare your case—things like ordering your medical records, hiring experts to evaluate accident evidence, meeting with your doctors to find out what they have to say, paying court reporters to come to depositions, and paying court filing fees.
These expenses are paid up front by your lawyer, who keeps track of them as your case goes along. The defense is doing the same thing, keeping track of how much it is spending to fight you. In addition, the defense is paying its lawyer by the hour, so the more work that is done on your case, the more the costs are mounting both on your tab and at the opposing lawyer’s office.
At the end of the case, the lawyer adds up the amount he or she has spent to get the case ready. The total is subtracted from the settlement. This leaves what is called the “net amount” of the settlement. From the net amount that remains, the attorney charges the percentage contingent fee that you agreed to. The rest is yours.
There is a maximum amount of one-third of the net amount that the lawyer can charge in Michigan. However, there is no rule that says you have to pay that much. You are free to negotiate a lower fee with a lawyer if you wish. Paying a lower contingency fee means that you will keep more of the settlement the lawyer gets for you. It pays to “shop around” when you are interviewing lawyers to handle your personal injury case.
So you can see that guaranteeing you no fee if you don’t win doesn’t promise anything special. A percentage of nothing is nothing. But what about the case costs? Here is an example: Let’s say you have an auto accident case, and hire a lawyer for a 33 1/3% fee after costs are repaid. You end up settling your case for $100,000. The lawyer spent $3,000 to take depositions, hire an expert to confirm that you were not at fault, and to obtain your medical records and personal history information, among other charges. Here’s the math:
|Typical 1/3 fee:||$32,333|
Suppose you negotiated with your attorney before you signed anything, and said something like “I have done some checking, and there are many very good attorneys in Michigan who have had million dollar personal injury cases over and over again—with so many choices, why should I pay the maximum fee allowed—33 13%?” If you google “MCR 8.121” you will see the rule in Michigan that lawyers have to follow about contingency fee (percentage) cases. Now take a look at section D. It says right there that a lawyer can charge you less than the maximum if they want to!
Let’s just take the same money example we used in the chart above, using a lower fee, and see how you would come out financially. The only thing we are changing is the attorney fee, which is something you could have negotiated before you signed anything:
|A 22% fee:||$21,340|
Look at the difference. If you paid the same lawyer, same case, just 22% plus costs, you would get $10,993 more in your pocket than if you had signed up the same lawyer for 33 1/3%.
Don’t forget that you have negotiating power when it comes to the contingency fee. The case costs are a given—the lawyer cannot tell you that the fee does not take into account the money the lawyer will spend to prepare your case. You also cannot escape the potential to have to repay your opponents for the costs and fees they spend to defend themselves, if you don’t win.
One final word: you are responsible to repay the lawyer for the case costs that the lawyer spends to get your case ready. This is true whether you get a settlement or not. It is important that you ask questions about this before you hire a lawyer. That way, you will understand the kinds of things the lawyer will be spending money on, what items they will charge you for, and whether they charge you interest to pay these costs in advance.
“Can my lawyer lend me money to help me with expenses during my case?”
We are sometimes asked by clients if we can lend them money that they will pay back to us out of the settlement we are trying to get for them. The Michigan Rules of Professional Conduct (MRPC) is the code that governs legal practice in this state. The Rules clearly state that such a loan between the lawyer and client is not allowed. The reason behind this is to assure that the lawyer is not using the promise of money to convince the client to hire the lawyer and to assure that the advice the client receives from the lawyer is best for the client, not for the sake of the loan the lawyer wants to protect.
The MRPC does allow the lawyer to advance the costs that go into preparing a case, for example to the court for filing fees, or to a doctor for medical reports. That’s different, because the client is responsible to repay those costs whether the case is won or lost, and none of that money is going to the client.
You may have seen television advertisements for companies that offer to make loans to people who have cases pending. If you have a personal injury or other case for money damages, you should talk to your lawyer before you enter into any loan agreement using your case as collateral. These loans are very expensive, and can greatly reduce the value of what you will receive when your case settles. Be sure to get legal counsel before you even think about taking out such a loan.
Source: MRCP 1.8(e)